Viacom Reports Results For First Quarter 2013

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NEW YORK, Jan. 31, 2013 /PRNewswire-FirstCall/ --

Viacom Inc. (NASDAQ: VIAB, VIA) today reported financial results for the fiscal first quarter, which ended December 31, 2012.  Revenues decreased 16% to $3.31 billion, driven primarily by lower Filmed Entertainment revenues due to the timing and mix of releases. Operating income and adjusted net earnings from continuing operations attributable to Viacom declined 22% to $797 million and $461 million, respectively, reflecting lower Filmed Entertainment results and a decline in Media Networks advertising revenues, partially offset by increased affiliate revenues. Adjusted diluted earnings per share from continuing operations decreased 14% to $0.91 per diluted share.

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Sumner M. Redstone, Executive Chairman of Viacom, said, "Viacom continues to build on its impressive global portfolio of movies, television programming and digital content.  Philippe leads a talented executive and creative team at Viacom, and I am fully confident that by investing in new hits we will continue to build our outstanding brands and deliver strong value to shareholders."

Philippe Dauman, President and Chief Executive Officer of Viacom, said, "Throughout the quarter, we kept our focus on creative excellence and strategic programming investment. Our ongoing investments in programming continue to produce results, with positive ratings trends and growing consumer engagement in new hit content, despite difficult short-term comparisons based on the mix of film releases and the lingering effect of ratings softness last year. Our television brands continue to be highly valued by distribution partners, highlighted by our double digit organic affiliate revenue growth. Paramount is well positioned for the future, with several upcoming tentpole releases, including G.I. Joe: Retaliation, Pain & Gain, Star Trek Into Darkness and World War Z. In addition, we are working closely with existing distribution partners and new digital distributors to continue to launch robust and consumer-friendly content experiences.

"Viacom's ability to generate significant cash flow permits us to continuously invest in our businesses and deliver value directly to shareholders through our share repurchase and dividend programs.  Viacom's strong balance sheet has provided the flexibility to tap the financing markets and lower our average cost of debt."

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

 

 

December 31,

 

B/(W)

 

 

 

 

 

 

 

 

2012 vs.

(in millions)

 

 

2012

 

2011

 

2011

 

 

 

 

 

 

 

 

 

 

Media Networks

 

$

2,394

 

$

2,448

 

(2)

%

Filmed Entertainment

 

 

975

 

 

1,558

 

(37)

 

Eliminations

 

 

(55)

 

 

(54)

 

NM

 

 

 

 

 

 

 

 

 

 

 

       Total revenues

 

$

3,314

 

$

3,952

 

(16)

%

 

 

 

 

 

 

 

 

 

 

NM - Not Meaningful

 

 

 

 

 

 

 

 

 

 

Quarterly revenues of $3.31 billion represented a 16% decline from the prior year.  Media Networks revenues decreased 2% to $2.39 billion, driven by lower advertising revenues, partially offset by increased affiliate revenues.  Domestic and worldwide advertising revenues each decreased 6%.  The decline in domestic advertising revenues was driven by lower ratings.  Domestic affiliate revenues increased 4%.  Excluding the impact of digital distribution arrangements, which are affected by the timing of available programming, the domestic affiliate revenue growth rate was in the low-double digits.  Worldwide affiliate fees increased 3%. 

Filmed Entertainment revenues were down 37% to $975 million.  Worldwide theatrical revenues decreased 42% in the quarter to $328 million, principally reflecting the difficult comparison against the prior year release of Mission: Impossible – Ghost Protocol, as well as the year over year comparison of revenue from third-party theatrical releases.  Worldwide home entertainment revenues declined 43%, principally resulting from fewer releases in the quarter compared to the first quarter of 2012.  The decline in home entertainment revenues also reflects lower carryover revenues from the prior period release of Transformers: Dark of the Moon.  Television license fees decreased 24% to $227 million in the quarter.

Operating Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

 

 

December 31,

 

B/(W)

 

 

 

 

 

 

 

 

2012 vs.

(in millions)

 

 

2012

 

2011

 

2011

 

 

 

 

 

 

 

 

 

 

Media Networks

 

$

1,030

 

$

1,129

 

(9)

%

Filmed Entertainment

 

 

(139)

 

 

(31)

 

NM

 

Corporate expenses

 

 

(60)

 

 

(53)

 

(13)

 

Equity-based compensation

 

 

(31)

 

 

(29)

 

(7)

 

Eliminations

 

 

(3)

 

 

-

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

797

 

$

1,016

 

(22)

%

 

 

 

 

 

 

 

 

 

 

NM - Not Meaningful

 

 

 

 

 

 

 

 

 

 

Quarterly operating income decreased 22% to $797 million in the quarter, reflecting lower overall revenues from the timing and mix of Filmed Entertainment releases, as well as lower revenues and increased investments in programming at Media Networks. 

Quarterly adjusted net earnings from continuing operations attributable to Viacom declined $130 million, or 22%, in the quarter, principally due to the decline in operating income.  Adjusted diluted earnings per share from continuing operations for the quarter were $0.91, a 14% decline from the prior year's comparable quarter. 

Stock Repurchase Program

For the quarter ended December 31, 2012, Viacom repurchased 13.3 million shares under its stock repurchase program, for an aggregate purchase price of $700 million.  As of December 31, 2012, Viacom had 496 million shares of Common stock outstanding.  As of January 30, 2013, Viacom had $3.85 billion remaining in its $10 billion stock repurchase program. 

Debt

At December 31, 2012, total debt outstanding, including capital lease obligations, was $8.39 billion, compared with $8.15 billion at September 30, 2012.  The Company's cash balances were $671 million at December 31, 2012, a decrease from $848 million at September 30, 2012.

About Viacom

Viacom is home to the world's premier entertainment brands that connect with audiences through compelling content across television, motion picture, online and mobile platforms in over 160 countries and territories. With media networks reaching approximately 700 million global subscribers, Viacom's leading brands include MTV, VH1, CMT, Logo, BET, CENTRIC, Nickelodeon, Nick Jr., TeenNick, Nicktoons, Nick at Nite, COMEDY CENTRAL, TV Land, SPIKE, Tr3s, Paramount Channel and VIVA. Paramount Pictures, America's oldest film studio and creator of many of the most beloved motion pictures, continues today as a major global producer and distributor of filmed entertainment. Viacom operates a large portfolio of branded digital media experiences, including many of the world's most popular properties for entertainment, community and casual online gaming.

For more information about Viacom and its businesses, visit www.viacom.com. Keep up with Viacom news by following Viacom's blog at  blog.viacom.com and Twitter feed at  www.twitter.com/Viacom.

Cautionary Statement Concerning Forward-Looking Statements

This news release contains both historical and forward-looking statements. All statements that are not statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements reflect the Company's current expectations concerning future results, objectives, plans and goals, and involve known and unknown risks, uncertainties and other factors that are difficult to predict and which may cause actual results, performance or achievements to differ. These risks, uncertainties and other factors include, among others: the public acceptance of the Company's programs, motion pictures and other entertainment content on the various platforms on which they are distributed; technological developments and their effect in the Company's markets and on consumer behavior; competition for audiences and distribution; the impact of piracy; economic conditions generally, and in advertising and retail markets in particular; fluctuations in the Company's results due to the timing, mix and availability of the Company's motion pictures and other programming; changes in the Federal communications laws and regulations; other domestic and global economic, business, competitive and/or regulatory factors affecting the Company's businesses generally; and other factors described in the Company's news releases and filings with the Securities and Exchange Commission, including but not limited to its 2012 Annual Report on Form 10-K and reports on Form 10-Q and Form 8-K. The forward-looking statements included in this document are made only as of the date of this document, and the Company does not have any obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances. If applicable, reconciliations for any non-GAAP financial information contained in this news release are included in this news release or available on the Company's website at http://www.viacom.com .

VIACOM INC.

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

December 31,

(in millions, except per share amounts)

 

2012

 

2011

 

 

 

 

 

 

 

Revenues

 

$

3,314

 

$

3,952

Expenses:

 

 

 

 

 

 

       Operating

 

 

1,763

 

 

2,185

       Selling, general and administrative

 

 

697

 

 

689

       Depreciation and amortization

 

 

57

 

 

62

 

 

 

 

 

 

 

       Total expenses

 

 

2,517

 

 

2,936

 

 

 

 

 

 

 

Operating income

 

 

797

 

 

1,016

Interest expense, net

 

 

(110)

 

 

(105)

Equity in net earnings of investee companies

 

 

24

 

 

10

Other items, net

 

 

7

 

 

(4)

 

 

 

 

 

 

 

Earnings from continuing operations before provision for income taxes

 

 

718

 

 

917

 

 

 

 

 

 

 

Provision for income taxes

 

 

(236)

 

 

(316)

 

 

 

 

 

 

 

Net earnings from continuing operations

 

 

482

 

 

601

Discontinued operations, net of tax

 

 

(3)

 

 

(379)

 

 

 

 

 

 

 

Net earnings (Viacom and noncontrolling interests)

 

 

479

 

 

222

 

 

 

 

 

 

 

Net earnings attributable to noncontrolling interests

 

 

(9)

 

 

(10)

 

 

 

 

 

 

 

Net earnings attributable to Viacom

 

$

470

 

$

212

 

 

 

 

 

 

 

Amounts attributable to Viacom:

 

 

 

 

 

 

      Net earnings from continuing operations

 

$

473

 

$

591

      Discontinued operations, net of tax

 

 

(3)

 

 

(379)

 

 

 

 

 

 

 

      Net earnings attributable to Viacom

 

$

470

 

$

212

 

 

 

 

 

 

 

Basic earnings per share attributable to Viacom:

 

 

 

 

 

 

      Continuing operations

 

$

0.94

 

$

1.07

      Discontinued operations

 

 

-

 

 

(0.68)

      Net earnings

 

$

0.94

 

$

0.39

 

 

 

 

 

 

 

Diluted earnings per share attributable to Viacom:

 

 

 

 

 

 

      Continuing operations

 

$

0.93

 

$

1.06

      Discontinued operations

 

 

(0.01)

 

 

(0.68)

      Net earnings

 

$

0.92

 

$

0.38

 

 

 

 

 

 

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

      Basic

 

 

501.5

 

 

550.6

      Diluted

 

 

509.1

 

 

557.2

 

 

 

 

 

 

 

Dividends declared per share of Class A and Class B common stock

 

$

0.275

 

$

0.25

 

 

 

 

 

 

 

 

 

 

 

VIACOM INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

December 31,

 

 

September 30,

(in millions, except par value)

 

2012

 

 

2012

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

           Cash and cash equivalents

$

671

 

$

848

           Receivables, net

 

2,602

 

 

2,533

           Inventory, net

 

797

 

 

832

           Deferred tax assets, net

 

68

 

 

68

           Prepaid and other assets

 

485

 

 

572

 

 

 

 

 

 

                      Total current assets

 

4,623

 

 

4,853

Property and equipment, net

 

1,046

 

 

1,068

Inventory, net

 

4,105

 

 

4,205

Goodwill

 

11,067

 

 

11,045

Intangibles, net

 

322

 

 

328

Other assets

 

734

 

 

751

 

 

 

 

 

 

Total assets

$

21,897

 

$

22,250

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

           Accounts payable

$

193

 

$

255

           Accrued expenses

 

913

 

 

943

           Participants' share and residuals

 

1,166

 

 

989

           Program rights obligations

 

588

 

 

569

           Deferred revenue

 

210

 

 

230

           Current portion of debt

 

18

 

 

18

           Other liabilities

 

634

 

 

826

 

 

 

 

 

 

                      Total current liabilities

 

3,722

 

 

3,830

 

 

 

 

 

 

Noncurrent portion of debt

 

8,371

 

 

8,131

Participants' share and residuals

 

378

 

 

533

Program rights obligations

 

571

 

 

642

Deferred tax liabilities, net

 

70

 

 

5

Other liabilities

 

1,454

 

 

1,491

Redeemable noncontrolling interest

 

175

 

 

179

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Viacom stockholders' equity:

 

 

 

 

 

           Class A Common stock, par value $0.001, 375.0 authorized; 51.1 and 51.1

 

 

 

 

 

                outstanding, respectively

 

-

 

 

-

           Class B Common stock, par value $0.001, 5,000.0 authorized; 445.2 and 455.9

 

 

 

 

 

                outstanding, respectively

 

-

 

 

1

           Additional paid-in capital

 

8,997

 

 

8,916

           Treasury stock, 280.4 and 267.1 common shares held in treasury, respectively

 

(11,725)

 

 

(11,025)

           Retained earnings

 

10,149

 

 

9,820

           Accumulated other comprehensive loss

 

(256)

 

 

(264)

 

 

 

 

 

 

                      Total Viacom stockholders' equity

 

7,165

 

 

7,448

 

 

 

 

 

 

Noncontrolling interests

 

(9)

 

 

(9)

 

 

 

 

 

 

Total equity

 

7,156

 

 

7,439

 

 

 

 

 

 

Total liabilities and equity

$

21,897

 

$

22,250

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES REGARDING NON-GAAP FINANCIAL INFORMATION

The following table reconciles the Company's results for the quarter ended December 31, 2012 to adjusted results that exclude the impact of certain items identified as affecting comparability ("Factors Affecting Comparability"), including discrete tax benefits.  The Company uses consolidated adjusted operating income, adjusted net earnings from continuing operations attributable to Viacom and adjusted diluted earnings per share ("EPS") from continuing operations, as applicable, among other measures, to evaluate the Company's actual operating performance and for planning and forecasting of future periods. The Company believes that the adjusted results provide relevant and useful information for investors because they clarify the Company's actual operating performance, make it easier to compare Viacom's results with those of other companies and allow investors to review performance in the same way as our management.  Since these are not measures of performance calculated in accordance with accounting principles generally accepted in the United States of America, they should not be considered in isolation of, or as a substitute for, operating income, net earnings from continuing operations attributable to Viacom and diluted EPS as indicators of operating performance, and they may not be comparable to similarly titled measures employed by other companies.

 

 

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(in millions, except per share amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

December 31, 2012

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

 

 

 

 

Pre-tax Earnings

 

 

Net Earnings from

 

 

from

 

 

Operating

 

 

from Continuing

 

 

Continuing Operations

 

 

Continuing

 

 

Income

 

 

Operations(1)

 

 

Attributable to Viacom

 

 

Operations

 

 

 

 

 

 

 

 

 

 

 

 

Reported results

$

797

 

$

718

 

$

473

 

$

0.93

Factors Affecting Comparability:

 

 

 

 

 

 

 

 

 

 

 

               Discrete tax benefits (2)

 

-

 

 

-

 

 

 (12)

 

 

 (0.02)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted results

$

797

 

$

718

 

$

461

 

$

0.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Pre-tax earnings from continuing operations represent earnings before provision for income taxes.

(2)

Adjusted results for the quarter ended December 31, 2012 exclude $12 million of discrete tax benefits.  The benefits recognized in the quarter principally reflect the release of tax reserves with respect to certain effectively settled tax positions.

 

 

SOURCE Viacom Inc.


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